Sebi to simplify MFs' new fund offer documents

Market regulator holding talks with AMFI on the issue.

The Securities and Exchange Board of India (Sebi) is planning to simplify the offer document (OD) of mutual funds' new fund offerings (NFOs) in a move to make it investment decisions easier.

Sebi has reportedly held two rounds of discussions with the Association of Mutual Funds in India (AMFI), which is the body for mutual funds in the country.

The proposal is likely to be referred to the Sebi board shortly, sources said.

The new rule will reduce the costs and time involved in preparing and filing offer documents with Sebi.

"The rule (on ODs), if implemented, will be in the interest of investors. They can take informed decisions by going through a document which is lean and relevant," said Vineet Potnis, chief marketing officer of DBS Cholamandalam Asset Management Company.

The move coincides with Sebi circular, today, asking mutual funds to spend at least five seconds to warn investors on the risks involved in mutual fund investments.

Sebi recently proposed fast-track clearances for fixed maturity plans (FMPs), investing only in short-term debt instruments.

About 70 per cent of the mutual fund offer documents are filed for closed-ended schemes such as FMPs and interval schemes involving several series.

Although mutual fund houses make disclosures according to mandatory key information memorandum (KIM), the market players still think that a large portion of the offer documents is repetitive.

The Indian mutual fund industry has 33 players managing assets worth Rs 5,48,063.51 crore.

Several players are awaiting the Sebi's approval to enter the mutual funds business in India.

The proposed rule may not be applicable for new funds as investors have limited knowledge about their businesses, said sources.

Sebi also intends to have a portal containing vital information about companies.

This will not only ease the filing process, but also do away with redundant information. It is an important move by the Sebi, explained sources.